Commercial demand fuels construction expansion

2 March 2004
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02 March 2004 | Gareth Mytton

UK construction companies were busier in February than the previous month, according to the latest PMI figures.

The headline purchasing managers' index (PMI) - a composite indicator of economic conditions compiled by CIPS and NTC Research - rose to 58.3, up from 56.3 in January, on the back of new orders.

Growth eased in the housing sector for the third successive month to stand at 56.9, but demand for new homes still rose. Commercial construction, at 61.5, showed the biggest increase, which companies attributed to better conditions in the wider UK economy. Civil engineering activity also rose on January's figures, to reach 55.6.

More than 40 per cent of companies won a greater volume of new business, largely in response to improved business conditions that enabled firms to win more contracts. They also took on more staff (53.2).

Building companies have now increased their quantities of purchases every month since December 2001, with February's index rising to 55.9. This increased the pressure on suppliers' delivery times, which lengthened again.

Rising metals prices, which were also mentioned in this month's manufacturing report, fuelled a big rise in input prices (64.6).

Business made greater use of subcontractors (53.5), whose rates increased (52.8) but quality and availability declined, at 48.4 and 49.7 respectively.

SMmar2004

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